By: Kevin O'Grady
I hate to go over to the bear camp, but while there is still an underlying optimism out there, the general feeling is that the market isn't going anywhere without a capitulation. By capitulation I mean major, short-term, panic inducing sell-off. The Apple and Intel
pre-announcements set the stage for this event and if history is any indication it will be coming soon. Typically the market experiences its best performance between the second week of October and the second week of March. However, in order to get this period of outperformance started something has to change. The easiest way to give investors a reason to stop selling and start buying is to have stocks look like irresistible bargains. Oil and the
Euro, the two major problems facing the market right now, need more time to workthemselves out. That leaves the other problem facing investors right now, the belief that stocks (especially tech stocks) are overvalued relative to their earnings. Money has been flowing into stock funds all year, but hasn't been put to work because institutional investors saw most of the high growth stocks as being overvalued. A sharp sell-off would complete the process that began in January of bringing stocks back to more reasonable levels and in doing so make them appealing again. Even if you don't buy this scenario and believe the market has put in a bottom already, the one conclusion that should be considered seriously is that in the short-term the market's downside risk outweighs its upside potential.
quelle: quote.com
gruss jj
